M/s. Wilson & Co. Ltd., Coimbatore V. ACIT, CHENNAI

ITA 2850/CHNY/2004

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51719 (ITAT-CHENNAI)
• Duration Of Justice: 6 year(s) 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2011
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 04-08-2011
• Assessment Year: 2000-2001
• Appeal Filed On: 08-11-2004
• Court: TRIBUNAL
• Department Lawyers: ANIRUDH RAI
• Assessee Lawyers: N CHANDIRASEKAR; N PRASAD
• Section: 43B; 234B; 260A; 139(1); 148; 139

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL CHENNAI D BENCH, CHENNAI. BEFORE SHRI.U.B.S. BEDI, J.M. & SHRI. ABRAHAM P. GE ORGE, A.M. I.T.A. NOS. 2850 AND 2851/MDS/2004 ASSESSMENT YEARS: 2000-01 AND 01-02 M/S. WILSON & CO. LTD., NO. 10, DAMU NAGAR, PULIAKULAM, COIMBATORE 641 045. [PAN: AAACW3577D] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY RANGE III(3), CHENNAI. (APPELLANT) (RESPONDENT) APPELLANT BY : S/SHRI N. PRASAD & N. CHANDIRASEKAR RESPONDENT BY : SHRI ANIRUDH RAI, CIT- DR DATE OF HEARING : 04.08.2011 DATE OF PRONOUNCEMENT : 12.08.2011 ORDER PER U.B.S. BEDI, J.M. THESE TWO APPEALS OF THE ASSESSEE ARE DIRECTED AGA INST THE SEPARATE ORDERS PASSED BY THE LD. CIT(A) III, CHENNAI BOTH DATED 12 .10.2004 RELEVANT TO THE ASSESSMENT YEAR 2000-01 AND 01-02 RESPECTIVELY. 2. THESE APPEALS INVOLVE SOME COMMON ISSUE, WERE H EARD TOGETHER, THEREFORE BEING DISPOSED OF BY THIS SINGLE ORDER FOR THE SAKE OF CONVENIENCE. 3. THESE APPEALS WERE EARLIER DISPOSED OF BY CONS OLIDATED ORDER DATED 16.05.2005 BY HOLDING THAT THE ASSESSMENT FRAMED BY THE ASSESSING OFFICER IS VOID AB INITIO ON THE GROUND THAT NOTICE UNDER SECTION 1 43(2) WAS ISSUED BEYOND THE PERIOD OF 12 MONTHS AS STIPULATED IN THE TO SECTION 143(2)(II) APPLIES TO NOTICE ISSUED UNDER SECTION 148 ALSO AND THE TRIBUNAL ALSO OPINED THAT IT WAS NOT I II I.T.A. NO .T.A. NO .T.A. NO .T.A. NOS SS S. .. .2850 & 2851/MDS/04 2850 & 2851/MDS/04 2850 & 2851/MDS/04 2850 & 2851/MDS/04 2 NECESSARY TO DECIDE OTHER GROUNDS. 4. THE DEPARTMENT TOOK UP THE MATTER IN APPEAL BEF ORE THE HONBLE JURISDICTIONAL HIGH COURT UNDER SECTION 260A OF THE INCOME TAX ACT AGAINST THE COMMON ORDER DATED 16.05.2005 AND THE HONBLE HIGH COURT IN T.C.(A) NO. 167 AND 168 OF 2008 DATED 29.04.2011 HAS DECIDED THE LE GAL ISSUE AGAINST THE ASSESSEE BY ALLOWING THE APPEALS OF THE DEPARTMENT AND REMITTED THE CASE ON MERITS ONLY BACK TO THE TRIBUNAL FOR DECIDING THE A PPEALS AFRESH. 5. AS REGARDS CASE ON MERITS IS CONCERNED, IN THE APPEAL OF THE ASSESSEE IN ITA NO. 2850/MDS/2004 FOR THE ASSESSMENT YEAR 2000- 01, THE ASSESSEE RAISED IN ALL 12 GROUNDS, BUT AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE PRESSED GROUND NO. 7 AND 11 AND REST OF THE GROUNDS WERE NO T PRESSED. SO, BY MAKING ENDORSEMENT IN THE MEMO OF APPEAL TO THIS EFFECT, T HE ASSESSEES COUNSEL INSISTED FOR ADJUDICATING GROUND NO. 7 AND 11 ONLY, WHICH RE AD AS UNDER: 7. THE LEARNED ASSESSING OFFICER HAS ERRED IN ARR IVING AT THE CONCLUSION THAT THE INCOME EARNED BY THE APPELLANT DOES NOT CO NSTITUTE AGRICULTURAL INCOME WITHOUT CONSIDERING THE FACTS AND CIRCUMSTAN CES OF THE CASE. 11. THE LEARNED ASSESSING OFFICER HAS ERRED IN LEV YING INTEREST U/S 234B WITHOUT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE. 6. SIMILARLY, APPEAL IN ITA NO. 2851/MDS/2004 FOR THE ASSESSMENT YEAR 2001- 02 THE ASSESSEE HAS RAISED IN ALL 11 GROUNDS, BUT A T THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE PRESSED GROUND NO. 7, 8 AN D 10 AND REST OF THE GROUNDS WERE NOT PRESSED. SO, BY MAKING ENDORSEMENT IN THE MEMO OF APPEAL TO THIS EFFECT, THE ASSESSEES COUNSEL INSISTED FOR ADJUDICATING GR OUND NO. 7, 8 AND 10 ONLY, WHICH READS AS UNDER: 7. THE LEARNED ASSISTANT COMMISSIONER OF INCOME T AX HAS ERRED IN I II I.T.A. NO .T.A. NO .T.A. NO .T.A. NOS SS S. .. .2850 & 2851/MDS/04 2850 & 2851/MDS/04 2850 & 2851/MDS/04 2850 & 2851/MDS/04 3 ARRIVING AT THE CONCLUSION THAT THE INCOME EARNED B Y THE APPELLANT DOES NOT CONSTITUTE AGRICULTURAL INCOME WITHOUT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE. 8. THE LEARNED ASSISTANT COMMISSIONER OF INCOME TA X HAS ERRED IN DISALLOWING THE REMITTANCES MADE TO THE CENTRAL GOV ERNMENT ON ACCOUNT OF PF & ESI CONTRIBUTIONS BY THE APPELLANT WITHIN THE TIME & GRACE PERIOD ALLOWED UNDER THOSE ENACTMENTS. 10. THE LEARNED ASSISTANT COMMISSIONER OF INCOME TA X HAS ERRED IN LEVYING INTEREST U/S 234B WITHOUT CONSIDERING THE F ACTS AND CIRCUMSTANCES OF THE CASE. 7. AS REGARDS FIRST COMMON GROUND, WHICH IS WITH REGARD TO TREATING AGRICULTURAL INCOME DISCLOSED BY THE ASSESSEE AS INCOME FROM OTH ER SOURCES, ACCORDING TO THE ASSESSING OFFICER, THE ASSESSEE HAS TAKEN ON LEASE A LAND MEASURING 49.5 ACRES BEING TEA ESTATE FROM M/S. WOODBRIAR ESTATE LIMITED ON AN ANNUAL RENT, THE ASSESSING OFFICER AFTER CONSIDERING THE FACTS SUCH AS INCOME OFFERED FOR SALE OF GREEN TEA LEAVES AND EXPENSES INCURRED CAME TO THE CONCLUSION THAT THE ASSESSEE IS NOT ENGAGED IN THE BASIC AGRICULTURAL ACTIVITY A ND IS NOT ELIGIBLE FOR EXEMPTION AS AGRICULTURAL INCOME. THIS, ACCORDING TO THE ASSESSM ENT ORDER, IS BASED ON THE HONBLE SUPREME COURTS JUDGMENT IN THE CASE OF CIT V. RAJA BENOY KUMAR SAHAS ROY (1957) REPORTED IN 32 ITR 466. 7.1 THE ASSESSEE, IN APPEAL, SUBMITTED BEFORE THE F IRST APPELLATE AUTHORITY THAT AS REGARDS, AGRICULTURAL INCOME ON SALE OF GREEN TE A LEAVES IS CONCERNED, THE PROVISIONS OF SECTION 2(1A) DEFINES AGRICULTURAL IN COME, IT IS CLEAR FROM THE PROVISION THAT WHAT IS CRUCIAL TO THE ISSUE IS WHETHER THE IN COME IS IN THE NATURE OF AGRICULTURE OR NOT. IT IS ALSO STATED BY THE LD. COUNSEL FOR TH E ASSESSEE THAT JUDGMENT OF HONBLE SUPREME COURT IN RESPECT OF CIT V. RAJA BENOY KUMAR SAHAS ROY (SUPRA) HAS NOT BEEN INTERPRETED PROPERLY, WHEREIN THE EMPHASIS IS ON THE INCOME, WHICH SHOULD BE I II I.T.A. NO .T.A. NO .T.A. NO .T.A. NOS SS S. .. .2850 & 2851/MDS/04 2850 & 2851/MDS/04 2850 & 2851/MDS/04 2850 & 2851/MDS/04 4 FROM AGRICULTURAL OPERATION. 7.2 THE LD. CIT(A), WHILE CONSIDERING THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2000-01 HAS CONFIRMED THE ACTION OF THE ASSESSING OFFICER AS PER PARA 4.2 OF HIS ORDER, WHICH READS AS UNDER: 4.2 I HAVE CONSIDERED THE RIVAL SUBMISSIONS. HERE, THE DISPUTE IS THAT INCOME FROM THE SALE OF GREEN TEA LEAVES IS AGRICUL TURAL INCOME IN NATURE OR NOT. THE APPELLANT COMPANY HAD TAKEN ON LEASE A LAN D FROM M/S. WOODBRIAR ESTATES LTD., A HOLDING COMPANY OF THE APPELLANT CO MPANY, HOLDING 94% OF THE SHARES OF WILSON & CO. LTD. THE APPELLANT HAS T AKEN THE LAND ON LEASE ALONG WITH TEA BUSHES AND HENCE IT CANNOT BE SAID T O HAVE GROWN THE TEA. THE APPELLANT COMPANY HAS NOT DONE ANY BASIC AGRICULTUR AL ACTIVITIES OF SOWING SEEDS OR TILING THE LAND. I HAVE PERUSED THE ORDERS OF THE AGRICULTURAL INCOME TAX OFFICER IN THIS REGARD. THE ASSESSING OFFICER I N HIS ORDER PLACED RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CAS E OF CIT V. RAJA BENOY KUMAR SAHAS ROY (1957) REPORTED IN 32 ITR 466 WHICH IS SQUARELY COVERED IN THIS CASE. HENCE I DO NOT FIND ANY REASON TO INT ERFERE WITH THE ACTION OF THE ASSESSING OFFICER. THEREFORE, THE ADDITION AMOUNTIN G TO ` .30,08,071/- IS CONFIRMED. THE APPELLANT FAILS ON THIS GROUND. 7.3 SIMILARLY, FOR THE ASSESSMENT YEAR 2001-02, THE ASSESSEE CLAIMED EXEMPTION ON AGRICULTURAL INCOME AMOUNTING TO ` .13,07,163/- AND FACTS AND CIRCUMSTANCES FOR THIS YEAR WAS SAME AS FOR THE ASS ESSMENT YEAR 2000-01, FOR THE REASONS STATED IN THE APPEAL FOR THE ASSESSMENT YEA R 2000-01, THE ADDITION AMOUNTING TO ` .13,07,163/- MADE BY THE ASSESSING OFFICER CAME TO BE CONFIRMED BY THE LD. CIT(A), WHILE DISMISSING THIS GROUND OF APPEAL OF THE ASSESSEE. 7.4 THE ASSESSEES COUNSEL, BEFORE US, WHILE REITER ATING THE SUBMISSIONS AS MADE BEFORE THE LOWER AUTHORITIES HAS PLEADED FOR S ETTING ASIDE THE ORDERS OF AUTHORITIES BELOW BY HOLDING THAT INCOME DERIVED BY THE ASSESSEE FROM SALE OF GREEN TEA LEAVES IS AN AGRICULTURAL INCOME, WHICH C ANNOT BE TREATED AS INCOME FROM OTHER SOURCES, BECAUSE THE ASSESSEE IS TREATING SUC H INCOME FOR BOTH THE YEARS BY I II I.T.A. NO .T.A. NO .T.A. NO .T.A. NOS SS S. .. .2850 & 2851/MDS/04 2850 & 2851/MDS/04 2850 & 2851/MDS/04 2850 & 2851/MDS/04 5 DOING AGRICULTURAL OPERATIONS AS AGRICULTURAL INCOM E AND SO FAR AS THE HONBLE SUPREME COURTS DECISION AS RELIED UPON BY THE ASSE SSING OFFICER IS CONCERNED, IT IS NOT APPLICABLE TO THE FACTS OF THE CASE BECAUSE THE ASSESSEE HAS PERFORMED AGRICULTURAL OPERATION ON THE LEASE LAND AND INCOME GENERATED FROM SALE OF TEA LEAVES IS AN AGRICULTURAL INCOME. TO SUPPORT THE PL EA OF THE ASSESSEE, THE ASSESSEE HAS FURNISHED VARIOUS DETAILS INCLUDING PR OFIT AND LOSS ACCOUNT FOR THE ASSESSMENT YEAR 2000-01 IN WHICH EXPENDITURE ON ACC OUNT OF CULTIVATION CHARGES, HARVESTING EXPENSES, GENERAL CHARGES, STAFF & LABOU R WELFARE EXPENSES TO THE EXTENT OF ` .16,45,173.31 AND PROFIT FOR THE YEAR HAS BEEN SHOW N AS ` .13,31,913/-. THIS CULTIVATION EXPENSES ALSO INCLUDES INFILLING W AGES TO THE EXTENT OF ` .431.94 HAS BEEN SHOWN, WHICH AMPLY PROVES THAT THE ASSESSEE HA S DONE FILLING OF THE SITE, WHICH GETS EFFECTED WITH HEAVY RAIN, ETC. EVEN IF I T HAS NOT DONE PLANTATION, BUT ALL THE ACTIVITIES HAVE BEEN CARRIED OUT INCLUDING NORM AL WEEDING, MANURING, FUNGICIDE SPRAYING, ACCARICIDE SPRAYING, FOLIAR SPRAYING, PRU NING, BOUNDARIES/FENCING INFILLING, LOADING AND TRANSPORTING CHEMICAL WEEDING AND IRRIG ATION, STORE TOOLS AND SPRAYING UPKEEP AND PLUCKING, ETC. SO, THIS CLEARLY INDICATE S THAT AGRICULTURAL OPERATION WAS DONE EVEN AFTER THE ASSESSEE HAS TAKEN LEASE THE LA ND WITH TEA PLANT BUSHES. THEREFORE, NEITHER THE ASSESSING OFFICER IS RIGHT I N TREATING THE AGRICULTURAL INCOME AS INCOME FROM OTHER SOURCES NOR THE LD. CIT(A) IS JUSTIFIED IN CONFIRMING THE ORDERS OF THE ASSESSING OFFICER FOR BOTH THE YEARS IN THIS REGARD, IT WAS THUS, PLEADED FOR TREATING THE INCOME GENERATED THROUGH SALE OF GREEN TEA LEAVES AS AGRICULTURAL INCOME. 8. THE LD. DR STRONGLY PLEADED THAT THE ASSESSEE H AS TAKEN ON LEASE 49.50 I II I.T.A. NO .T.A. NO .T.A. NO .T.A. NOS SS S. .. .2850 & 2851/MDS/04 2850 & 2851/MDS/04 2850 & 2851/MDS/04 2850 & 2851/MDS/04 6 ACRES OF LAND WITH PLANT BUSHES AND IT JUST DID HAR VESTING OF SUCH GREEN TEA LEAVES AND SALE OF THE SAME IN THE MARKET. THE ASSESSEE HA S TAKEN THE LAND ON LEASE ALONG WITH THE TEA BUSHES AND HENCE IT CANNOT BE SA ID TO HAVE GROWN THE TEA. THE TEA LEAVES GROW ON THE BUSHES AND THE ASSESSEE HAS ONLY TENDED THE BUSHES AND SOLD THE GREEN TEA LEAVES. THE ASSESSEE HAS NOT DON E THE BASIC OPERATION OF THE CULTIVATING THE TEA BUSHES. THE CASE LAW RELIED UPO N BY THE ASSESSING OFFICER TITLED V. RAJA BENOY KUMAR SAHAS ROY (SUPRA) OF HONBLE SU PREME COURT IS FULLY APPLICABLE BECAUSE NECESSARY AGRICULTURAL OPERATION S AS ENVISAGED FOR CARRYING OUT AGRICULTURAL ACTIVITY HAS NOT BEEN PERFORMED BY THE ASSESSEE ON THE LEASED LAND AND IT HAS JUST HARVESTED THE TEA LEAVES AND SOLD T HEM IN THE MARKET. THEREFORE, THE ACTION OF THE AUTHORITIES BELOW IS JUSTIFIED IN NOT TREATING THE CLAIM OF THE ASSESSEE ON ACCOUNT OF SALE OF GREEN TEA LEAVES AS AGRICULTU RAL INCOME. SO, THE ORDER OF THE LD. CIT(A) SHOULD BE UPHELD AND THE APPEAL OF THE A SSESSEE FOR BOTH THE YEARS SHOULD BE DISMISSED. 9. IN ORDER TO COUNTER THE SUBMISSIONS OF THE LD. DR, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT FIRSTLY THE ASSESSEE HAS CA RRIED OUT AGRICULTURAL OPERATION IN ORDER TO GET GREEN TEA LEAVES, WHICH ARE GROWN O N THE LAND AND MOREOVER, FOR THE ASSESSMENT YEARS 2002-03 AND 2003-04, THE CHENNAI B ENCHES OF ITAT HAVE ACCEPTED SUCH INCOME AS AGRICULTURAL INCOME IN ITA NO. 2275/MDS/2006 AND ITA NO. 2384/MDS/2006 FOR THE ASSESSMENT YEAR 2002-03 V IDE ORDER DATED 20.08.2008 AND ITA NO. 415/MDS/2007 FOR THE ASSESSMENT YEAR 20 03-04 VIDE ORDER DATED 21.11.2008. SO THIS IS A COVERED ISSUE IN FAVOUR OF THE ASSESSEE AND WHILE FOLLOWING THE SAME, THE APPEALS OF THE ASSESSEE SHO ULD BE ALLOWED. I II I.T.A. NO .T.A. NO .T.A. NO .T.A. NOS SS S. .. .2850 & 2851/MDS/04 2850 & 2851/MDS/04 2850 & 2851/MDS/04 2850 & 2851/MDS/04 7 10. AFTER HAVING HEARD BOTH THE SIDES AND CONSIDER ING THE MATERIAL ON RECORD AS WELL AS PRECEDENT RELIED UPON BY RIVAL SIDES, WE FI ND IT TO BE UNDISPUTED FACT THAT THE ASSESSEE HAS TAKEN ON LEAVE 49.50 ACRES OF LAND ON PERPETUAL LEASE FOR 20 YEARS FROM A HOLDING COMPANY NAMELY M/S. WOODBRIAR ESTATE S LTD., HAVING 94% OF THE SHARES OF THE ASSESSEE COMPANY, AT THE RATE OF ` .10,000/- PER ANNUM. IT IS ALSO NOT IN DISPUTE THAT THE RENT RECEIVED FROM THE LEASING OUT AGRICULTURAL LAND WITH BUSHES OF TEA PLANTS IS OFFERED AS AGRICULTURAL INCOME BY THE HOLDING COMPANY WITH RESPECT TO LEASE RENTAL. IT IS ALSO UNDISPUTED FACT THAT TH E ASSESSEE SOLD GREEN TEA LEAVES DURING BOTH THE YEARS AND AFTER DEDUCTING EXPENSES FOR RESPECTIVE YEARS, NET AGRICULTURAL INCOME HAS BEEN SHOWN AT ` .30,08,071/- AND ` .13,07,163/- FOR THE ASSESSMENT YEARS 2000-01 AND 01-02 RESPECTIVELY, WH ICH AMOUNTS HAVE BEEN TREATED BY THE ASSESSING OFFICER AS INCOME FROM OTH ER SOURCES AND THE LD. CIT(A) HAS CONFIRMED THE ACTION OF THE ASSESSING OFFICER I N THIS REGARD FOR BOTH THE YEARS. WHILE CONSIDERING AND DECIDING THE ISSUE IN RELATIO N TO SALE OF TEA MANUFACTURE IN ITS FACTORY AS WELL AS SALE OF GREEN TEA LEAVES BY THE ASSESSEE, WE FIND THAT IN THE CONTEXT OF BENGAL AGRICULTURAL INCOME-TAX ACT, 1944 , IN REGARD TO INCOME FROM SALE OF GREEN TEA LEAVES AND WITH REFERENCE TO SECTION 8 (3) INCOME-TAX ACT, 1961 AND RULE 8 OF THE INCOME TAX RULES, 1962, IN THE CASE T ITLED UNION OF INDIA AND ANOTHER V. BELGACHI TEA CO. LTD. AND OTHERS REPORTED IN 304 ITR 1, THE HONBLE SUPREME COURT HASW DEALT WITH SIMILAR ISSUE WHILE DISCUSSIN G THE FACTS OF THE CASE. THE HEAD-NOTES AND HELD PORTION ARE AS UNDER: AGRICULTURAL INCOME-TAX-ASSESSEE HAVING TEA ESTATE-SELLING TEA MANUFACTURED IN ITS FACTORY AS WELL AS GREEN TEA LEAVESASSESSEE LIABLE TO PAY AGRICULTURAL INCOME-TAX ON 60 PER CENT. OF I II I.T.A. NO .T.A. NO .T.A. NO .T.A. NOS SS S. .. .2850 & 2851/MDS/04 2850 & 2851/MDS/04 2850 & 2851/MDS/04 2850 & 2851/MDS/04 8 A,C1UCULTURAL INCOME DETERMINED BY OFFICER IN THE CENTRE FOR PURPOSES OF INCOME-TAX ACT, 1961- ASSESSEE ALSO LIABLE UNDER BENGAL AGRICULTURAL INCOME-TAX ACT, 1944, IN REGARD TO INCOME FROM SALE OF GREEN TEA LEAVES-BENGAL AGRICULTURAL INCOME- TAX ACT, 1944, S. 8(3)-INCOME-TAX ACT, 1961-INCOME- TAX RULES, 1962, R. 8. THE ASSESSEE-COMPANY CARRIED ON THE BUSINESS OF GRO WING AND MANUFACTURING TEA IN ITS TEA ESTATE, WHICH CONSISTE D OF TEA GARDENS AND A FACTORY TO MANUFACTURE TEA. THE ASSESSEE SOLD THE TEA GROWN AN D MANUFACTURED BY IT AND ALSO SOLD GREEN TEA LEAVES. IT FILED A WRIT PETITION IN THE HIGH COURT, WHICH WAS ,DISPOSED OF BY THE HIGH COURT HOLDING (I) THAT IN REGARD TO TEA GROWN AND MANUFACTURED, THE ASSESSEE WAS LIABLE TO PAY AGRICU LTURAL INCOME-TAX UNDER THE BENGAL AGRICULTURAL INCOME-TAX ACT, 1944, ON 60 PER CENT. OF THE INCOME AS DETERMINED FOR THE PURPOSES OF THE INCOME-TAX ACT, 1961, AND (II) IN REGARD TO GREEN TEA SOLD AS AN AGRICULTURAL PRODUCT IT WAS TA XABLE UNDER THE BENGAL AGRICULTURAL INCOME-TAX ACT, 1944. ON APPEAL TO THE SUPREME COURT: HE1D, AFFIRMING THE DECISION OF THE HIGH COURT, (I) THAT THE OBJECT BEHIND THE CENTRE TAXING 40 PER CENT. OF TEA MANUFACTURED BY THE ASSESSEE WAS T HAT THERE WERE COMMON EXPENSES ON ESTABLISHMENT AND STAFF FOR THE TWO ACTIVITIES, THAT IS TEA GROWN AND TEA MANUFACTURED. THERE COULD BE ONLY ONE ASSESSMENT OF INCOME FROM TEA BUSINESS. FOR THE PURPOSE OF TAX ON AGRICU LTURAL INCOME THE AGRICULTURAL INCOME-TAX OFFICER HAD TO GO BY THE ASSESSMENT ORDE R MADE UNDER THE INCOME-TAX ACT, 1961 , AND THE CONTENTS OF THE ASSESSMENT FOR THE YEAR BY THE ASSESSING OFFICER UNDER THE 1961 ACT WOULD BE CONCLUSIVE EVID ENCE OF THE CONTENTS OF SUCH ORDER AND THE AGRICULTURAL INCOME-TAX OFFICER HAD T O GO BY THAT ASSESSMENT AND TAX ONLY 60 PER CENT. OF THE INCOME UNDER THE BENGAL AGRICULTUR AL INCOME-TAX ACT, 1944. (II) THAT INCOME BY SALE OF GREEN TEA LEAVES COULD NOT BE CALLED INCOME ASSESSABLE UNDER THE INCOME-TAX ACT, 1961, FOR THE PURPOSE OF THE 40 PER CENT. AND 60 PER CENT. SHARE BETWEEN THE CENTRE AND THE STATE. T HE INCOME FROM SALE OF GREEN TEA LEAVES WAS PURELY INCOME FROM AGRICULTURA L PRODUCT AND WAS NOT ASSESSABLE UNDER THE 1961 ACT . 10.1 FROM THE ABOVE DECISION, IT EMERGES THAT THE S ALE OF GREEN TEA LEAVES IS AGRICULTURAL INCOME WHEN THERE WERE TWO ACTIVITIES IN THIS REPORTED CASE, ONE THAT OF GROWING TEA LEAVES, SELLING THE SAME AND THE OTHER CARRYING OUT BUSINESS OF GROWING AND MANUFACTURING TEA, IN ITS TEA ESTATE. S O, CONSIDERING BOTH THE ASPECTS, I II I.T.A. NO .T.A. NO .T.A. NO .T.A. NOS SS S. .. .2850 & 2851/MDS/04 2850 & 2851/MDS/04 2850 & 2851/MDS/04 2850 & 2851/MDS/04 9 THE HONBLE SUPREME COURT HAS CATEGORICALLY HELD TH AT SINCE THE ASSESSEE DIRECTLY SOLD GREEN TEA LEAVES, SO IT CANNOT BE TAKEN TO BE INCIDENTAL TO THE BUSINESS AND WHATEVER INCOME DERIVED FROM THE SALE OF GREEN TEA LEAVES WAS ASSESSABLE AS AGRICULTURAL INCOME. THOUGH NONE OF THE PARTIES BEF ORE US HAS CITED THIS APEX COURTS DECISION, YET, IT IS FOUND TO BE ALMOST DIR ECT ON THE POINT.. 10.2. LOOKING INTO THE FACTS OF THE PRESENT CASE A ND THE ISSUE BEFORE US, WE, WHILE FOLLOWING THE RATIO OF THE ABOVE NOTED DECISION, HO LD THAT THE ACTIVITY OF THE ASSESSEE IN GROWING TEA AND SALE OF GREEN TEA LEAVE S IS AN AGRICULTURAL ACTIVITY IRRESPECTIVE OF THE FACT WHETHER IT IS CARRIED ON L EASED LAND OR SELF-OWNED LAND. SINCE NO PART OF THE EXPENSES AS DISCLOSED BY THE A SSESSEE OR OTHER DETAILS HAVE BEEN DISPUTED BY THE ASSESSING OFFICER, THEREFORE, WHILE REVERSING THE ORDERS OF AUTHORITIES BELOW, WE DIRECT THE ASSESSING OFFICER TO ACCEPT THE DECLARED NET INCOME ON ACCOUNT OF SALE OF GREEN TEA LEAVES (AFTE R DEDUCTING EXPENSES AS SHOWN) AS INCOME FROM AGRICULTURE FOR BOTH THE YEAR S. 11. THE SECOND COMMON ISSUE RAISED IN BOTH THE APP EALS IS WITH REGARD TO CHARGING OF 234B INTEREST. IT WAS VERY FAIRLY CONCE DED BY THE LD. COUNSEL FOR THE ASSESSEE THAT SINCE CHARGING OF INTEREST UNDER SECT ION 234B IS CONSEQUENTIAL, SO DIRECTION SHOULD BE ISSUED TO CHARGE THE SAME KEEPI NG IN VIEW THE INCOME FINALLY ASSESSED AFTER GIVING EFFECT TO THE ORDER TO BE PAS SED IN THESE APPEALS. TO SUCH PLEA, THE LD. DR DID NOT OBJECT. AS SUCH, THE ASSES SING OFFICER IS DIRECTED TO CHARGE 234B INTEREST ON FINALLY ASSESSED INCOME ON GIVING EFFECT TO THIS ORDER OF THE TRIBUNAL. I II I.T.A. NO .T.A. NO .T.A. NO .T.A. NOS SS S. .. .2850 & 2851/MDS/04 2850 & 2851/MDS/04 2850 & 2851/MDS/04 2850 & 2851/MDS/04 10 12. AS REGARDS ANOTHER GROUND IN THE APPEAL FOR TH E ASSESSMENT YEAR 2001-02 (GROUND NO. 8), THE SAME RELATES TO CHALLENGE WITH REGARD TO DISALLOWANCE OF REMITTANCE MADE TO HE CENTRAL GOVERNMENT ON ACCOUNT OF PF AND ESI CONTRIBUTION BY THE ASSESSEE WITHIN THE TIME ALLOWED AND GRACE P ERIOD ALLOWED UNDER THOSE RELEVANT ENACTMENTS AND THE LD. COUNSEL FOR THE ASS ESSEE SUBMITTED THAT SINCE ALL THESE PAYMENTS WERE MADE BEFORE THE DUE DATE FOR FI LING OF RETURNS UNDER SECTION 139(1), SO THE ASSESSEE IS ENTITLED TO RELIEF AND B Y RELYING UPON THE AMENDED PROVISION AND THE DECISION OF HONBLE KARNATAKA HIG H COURT IN THE CASE OF CIT V. SABARI ENTERPRISES [2008] 298 ITR 141, IT WAS PLEAD ED FOR ALLOWING THIS GROUND OF THE ASSESSEE. 13. THE LD. DR RELIED UPON THE ORDERS OF AUTHORITI ES BELOW IN THIS REGARD AND PLEADED FOR CONFIRMATION OF THE IMPUGNED ORDER ON T HIS ISSUE. 14. AFTER HAVING HEARD BOTH THE SIDES AND CONSIDER ING THE MATERIAL ON RECORD, WE FIND THAT ALL THE PAYMENTS IN RELATION TO PF AND ESI CONTRIBUTION HAVE BEEN MADE BEFORE THE DUE DATE OF FILING OF RETURN AS PRE SCRIBED UNDER SECTION 139(1) AS INCORPORATED BY THE ASSESSING OFFICER HIMSELF IN PA GE 3 PARA 5 OF THE ASSESSMENT YEAR DATED 19.03.2004 AND THE HONBLE KARNATAKA HIG H COURT IN THE CASE OF CIT V. SABARI ENTERPRISES (SUPRA), AS RELIED UPON BY THE L D. AR OF THE ASSESSEE, HAS HELD AS UNDER: CLAUSE (VA) OF SUB-SECTION (1) OF SECTION 36 OF TH E INCOME-TAX ACT, 1961, MAKES IT CLEAR THAT THE AMOUNTS ACTUALLY PAID BY THE ASSESSEE ON OR BEFORE THE DUE DATE FOR FILING THE RETURN UND ER SECTION 139 ARE ALLOWABLE DEDUCTIONS. HELD ACCORDINGLY, DISMISSING THE APPEALS, THAT THE CONTRIBUTIONS MADE BY THE ASSESSEE TO THE PROVIDENT FUND AND THE EMPLOYEES STATE INSURANCE WERE ALLOWABLE DEDUCTIONS EVEN THOUGH THE Y WERE MADE I II I.T.A. NO .T.A. NO .T.A. NO .T.A. NOS SS S. .. .2850 & 2851/MDS/04 2850 & 2851/MDS/04 2850 & 2851/MDS/04 2850 & 2851/MDS/04 11 BEYOND THE STIPULATED PERIOD AS CONTEMPLATED UNDER THE MANDATORY PROVISIONS OF SECTION 36(1)(VA) READ WITH SECTION 2 (24)(X) AND SECTION 43B AS THE AMOUNTS WERE PAID BY THE ASSESSEE ON OR BEFORE THE DUE DATE FOR FURNISHING THE RETURN UNDER SECTION 139(1). 15. THEREFORE, FOLLOWING THE SAID DECISION, WE DEC IDE THE ISSUE IN FAVOUR OF THE ASSESSEE AND DIRECT HIM TO DELETE THE DISALLOWANCE MADE IN THIS REGARD. 16. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSE E ARE ACCEPTED. ORDER PRONOUNCED ON 12.08.2011 SD/- SD/- (ABRAHAM P. GEORGE) ACCOUNTANT MEMBER (U.B.S. BEDI) JUDICIAL MEMBER CHENNAI, DATED, THE 12.08.2011 VM/- TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R.